Macy’s reported today that sales and profit are down. The company blamed weather and increased competition for the slump. But the most disturbing reason business is declining could be the state of the average Macy’s consumer. “The consumer has not bounced back with the confidence that we were all looking for,” CEO Terry Lundgren said at the Goldman Sachs Annual Retail Conference in September.
OK, as someone on LinkedIn said “who shops at Macy’s anyway?”. He could be right, but Macy’s is on to something here. Despite recent gains in employment, consumers don’t have the spending power that they used to. Every group surveyed by the Federal Reserve Board had a lower mean income in 2013 than they did in 2007. Mean wealth also declined for all the groups.
If you’re a marketer, you had better pay attention because while unemployment has declined wages are just now starting to feel the ripple effect and increase. Consumers don’t trust employers to keep their jobs safe and as such they are not going to get themselves in a hole by spending for things they don’t really need. Sure, that Starbuck’s latte is still a self indulgent treat, but saving money while going to the grocery store is style and it gives consumers a sense of empowerment.
Brands need to execute, and not just on the basic mix, they need to execute at every touchpoint. That means responding to a social media post within minutes not hours and it means fighting for every customer not just new ones. With an upcoming Presidential election the Republicans will be talking about cuts to everything except defense while Democrats will be talking about cuts to defense and spending increases while taxing the wealthy. This is going to make consumers very uncomfortable and the political ads, especially the negative ones, are going to raise the blood pressure of already pissed off consumers.
Brands has better tap into the pulse of consumers because if they don’t, the result is going to be lost share, customers and cuts.